An overview of the seven major L2 networks. What are their advantages and potential?

Author: Bai Ze Research Institute
 
Ethereum Layer-2 (L2) scaling solutions are booming and will be the biggest highlight of the next bull run, so how to find your 100X in this track? To answer this question, we will take an in-depth look at the 7 L2 projects with the greatest potential in the future.
This article summarizes the views of Crypto researchers MooMs and 0xFinish in Twitter threads.
1. Optimism
In October 2022, Optimism launched OP Stack, an open source development stack that powers the OP mainnet. It introduced the concept of superchain, which refers to a set of L2 blockchains (OP chains) built on OP Stack.
The stack consists of various code libraries that can be used to create highly customizable L2 blockchains. Essentially, its purpose is to simplify the creation of L2 blockchains.
The Bedrock upgrade on June 6, 2023 is the first official version of the OP Stack and brings several key improvements:
• Reduced costs
• Reduce deposit time by 70%
• Improved modularity of proofs
• Improved node performance
After the Bedrock upgrade, Optimism’s next step is to upgrade to the Superchain. Optimism’s L2 Rollup chain is the first member of the Superchain. Coinbase’s Base chain, which is about to launch the mainnet, will be the second member.
After raising $240 million, Worldcoin is also committed to building on OP Stack. Binance’s BNB Chain has also launched a testnet of its EVM-compatible OP chain opBNB based on OP Stack.
The ultimate goal is to form a "superchain" composed of various L2 networks built using OP Stack - all L2s will share ordering, proof, and cross-chain infrastructure to facilitate seamless communication between various networks.
Optimism is currently the third largest L2 by TVL, but with its OP Stack vision and partnerships, it is poised to become a leader in L2 in the coming years.
Too many people are optimistic about Arbitrum but ignore Optimism. Coinbase and Binance have brought a huge user base to Optimism, and I believe this is just the beginning.
2. Decision
Arbitrum is an Optimistic Rollup and is currently the largest and most dominant L2 network based on TVL. It launched its mainnet in August 2021.
The Arbitrum ecosystem currently consists of:
• Arbitrum One: The core Rollup of the entire Arbitrum ecosystem
• Arbitrum Nova: Rollup for projects with high expected transaction volumes
• Arbitrum Nitro: The open source stack that powers Arbitrum L2.
Here we focus on Arbitrum Nova, whose gas fee is 90% lower than Arbitrum One. Although Arbitrum Nova is less secure, it is well suited for gaming, social, and other high-bandwidth applications. Opensea and TreasureDAO recently launched markets on Arbitrum Nova.
What is Arbitrum's vision? Arbitrum, like Optimism, launched an open source framework for everyone to use in March 2023, called "Arbitrum Orbit", which allows any developer to create and deploy L3 without the need for permission or formal approval.
The easiest way to understand L3s is to think of them as L2 to Arbitrum One, which is Ethereum’s L2. They greatly improve the scalability of Arbitrum One, making it the most ideal solution for high-throughput applications.
The difference between OP Stack and Arbitrum Orbit is that L3 will be built on top of Arbitrum One, while OP chains will be independent networks that share security with each other.
L3 could be a good narrative going forward. However, I think OP Stack has more room to grow as it targets a wider audience through institutional entities.
Decision vs. Optimism
The main technical difference between the two chains is that Optimism uses a single round of fraud proofs, while Arbitrum uses multiple rounds of fraud proofs.
This means that Optimism’s approach is faster but potentially more expensive due to higher gas fees since it is executed on L1. Arbitrum’s issuance takes more time but is more cost-effective.
In addition, Optimism uses EVM, while Arbitrum has its own Arbitrum Virtual Machine (AVM). This means that Optimism's programming language is limited to Solidity. Arbitrum supports all EVM programming languages.
3. Polygon
Polygon is a blockchain that is working to enhance Ethereum’s scalability, and they do this by leveraging different solutions. Their flagship product is the Polygon PoS sidechain, which currently processes 2-3 million transactions per day from 300,000-400,000 addresses.
Polygon also got involved in the dAppChain narrative by releasing their own solution, Supernets, which enables developers to build customizable dApps chains.
Additionally, Polygon zkEVM (its EVM ZK-rollup solution) went live on mainnet in late March and has since seen around 20,000-50,000 transactions per day.
The recent Polygon 2.0 upgrade aims to unify these platforms to create a seamless user experience.
The concept of Polygon 2.0 is an ecosystem consisting of various L2 chains supported by ZK technology, utilizing a unique cross-chain coordination protocol to achieve seamless interoperability between Polygon zkEVM, Polygon PoS, and supernets.
Polygon 2.0 consists of four protocol layers, each supporting an important process within the ecosystem:
• Staking layer: Using Polygon’s native token MATIC to provide users with re-staking capabilities
• Interoperability layer: facilitates cross-chain messaging within the ecosystem
• Execution layer: enables any Polygon chain to generate batches of ordered transactions, i.e. blocks
• Proof layer: Prove all transactions on each Polygon chain
I see Polygon as the main competitor for Optimism to achieve mass adoption. They have already partnered with many large Web2 companies and attracted millions of users.
4. Base
“Base is a secure, low-cost, developer-friendly Ethereum L2 designed to bring the next billion users to Web3.”
Base is built by Coinbase based on the OP Stack and plans to be gradually decentralized in the coming years.
Since Coinbase, as a cryptocurrency exchange, has an easy “crypto<->fiat” gateway, Coinbase’s 110 million users and $80 billion in assets can easily adopt Base.
Base's testnet was released on February 23 and is expected to be launched on the mainnet this year.
Even in a bear market, Coinbase has 8.3 million monthly trading users (according to December 2022 data), while its competitors, Polygon, Optisium, and Arbitrum, have an average fee of 3.04 million, an average revenue of $1.23 million, and an average daily active user of about 200,000.
This means that Coinbase only needs to convert 2.50% of its 8.3 million bear market users into Base users to reach the average daily active users of these three competitors. Therefore, Base has the potential to become one of the main L2s in the DeFi (trading) field.
5. Mantle
Mantle is a novel modular L2 network designed to bring Ethereum’s scalability to a new level while maintaining a high degree of decentralization and strong security.
Launched in 2023, Mantle separates the three key layers of a blockchain (consensus, execution, and data availability) to allow for independent optimization:
• Consensus layer: It works similarly to how the L1 chain works, focusing primarily on ordering transactions and blocks.
• Execution layer: isolated from the other two layers and dedicated to executing transactions and smart contracts.
• Data Availability Layer: Based on innovative DAS technology, it ensures that data is always available and not withheld, improving the security of the network.
Mantle’s modular design could be a game changer for the L2 race. By separating the three key layers to allow for independent optimization, it could make the network more flexible and improve scalability without compromising security or decentralization.
Mantle has also received attention for its partnership with the decentralized autonomous organization BitDAO. This strategic partnership could bring significant value to the Mantle network and solidify its position in the blockchain ecosystem.
A unique feature of Mantle is its focus on enhancing user experience, especially for blockchain games or GameFi. With Mantle's high scalability, lower transaction costs, and faster transaction speeds, it could revolutionize the GameFi landscape.
Although Mantle is a newcomer to the L2 space, it has shown great promise. Its innovative technology, focus on user experience, and commitment to decentralization make it a strong competitor in the increasingly competitive L2 race.
6. opBNB
In June 2023, Binance announced the launch of the opBNB testnet. opBNB is built on OP Stack with a strong focus on maintaining compatibility with Binance Smart Chain (BSC), which provides significant advantages to BSC developers and users.
Similar to Base, opBNB will leverage the large user base of the Binance exchange to provide a seamless and cost-effective L2 solution for the millions of users who already use Binance. This shows that opBNB has great growth potential in the DeFi ecosystem.
It is worth noting that the success of opBNB will be closely related to BNB, the native token of the entire Binance ecosystem. If opBNB gains traction, it may have a positive impact on the value of BNB, which will have a ripple effect on the entire Binance ecosystem.
According to the roadmap, opBNB will launch its mainnet in 2023. The launch of the opBNB mainnet is worth watching as it will showcase Binance’s L2 solutions in areas such as high-frequency trading, gaming, and social networking.
7. zkSync
zkSync is an L2 scaling solution developed by Matter Labs. It uses zkRollup technology and aims to provide Ethereum-level security. It is one of the key projects driving the L2 revolution.
zkSync uses zero-knowledge proof technology to bundle multiple transactions into a single proof. This improves scalability by moving most of the computational work off-chain while ensuring a high level of security through the Ethereum mainnet.
A significant advantage of zkSync is that it allows users to pay for gas using the token they want to transfer, rather than having to use ETH. This greatly improves the user experience and brings Ethereum closer to mainstream adoption.
Matter Labs is also working to make zkSync upgradeable without a hard fork. This modular design ensures it can be incorporated into future Ethereum improvements and scale with the growing Ethereum ecosystem.
By using the PoS consensus mechanism for block validation, zkSync adheres to decentralization and is consistent with Ethereum’s core values.
The main goal of zkSync is to be completely permissionless, allowing any project to build and deploy smart contracts on its network. This will further help Ethereum's scalability and support for diverse dApps.
The vision of zkSync is more than just a scaling solution; it is a stepping stone towards a more scalable, secure, and user-friendly Ethereum network. With zkSync, the possibilities for Ethereum to revolutionize various industries are endless.
Keeping an eye on projects like zkSync is crucial to understanding the future of Ethereum and DeFi. As Ethereum continues to grow, zkSync will undoubtedly play a vital role in Ethereum’s growth and adoption.
zkSync is not just a competitor to L2 projects, it sets the standard for L2 security, scalability, and efficiency. As the Ethereum ecosystem continues to grow, zkSync is worth keeping an eye on in the long term.